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She came, she saw, she confounded: Clinton in Pakistan

Secretary of State Hillary Clinton’s recently concluded visit to Pakistan has left us none the wiser about how the United States and its allies will end the  Afghan war. In her public comments, she spoke of action ”over the next days and weeks – not months and years, but days and weeks”.  She promised the United States would tackle Taliban militants in eastern Afghanistan in response to a long-standing Pakistani complaint that Washington had neglected the region when  it decided to concentrate its forces in population centres in southern Afghanistan in 2010 (remember “government in a box”?). She called, in return, for cooperation on the Pakistani side of the border to ”squeeze these terrorists so that they cannot attack and kill any Pakistani, any Afghan, any American, or anyone.”  Between the two countries, they would tackle the Afghan Taliban, the Haqqani network and the Tehrik-e-Taliban Pakistan (TTP), or Pakistani Taliban. But squeeze them to what end?  To weaken all but the hard-core leadership of the Afghan Taliban and the Haqqani network so that they agree to lay down arms and rejoin the political process in Afghanistan? Or to entice them into serious negotiations through which they might be offered a share of power in Kabul, or accommodated in a “soft partition” of Afghanistan (an idea deeply unpopular among Afghans) which leaves them in control of the south and the east? As Pakistani columnist Ejaz Haider wrote in Pakistan Today just before Clinton arrived, the current U.S. policy looks a��bit like the dialogue between Alice and the Cheshire Cat. “‘Would you tell me, please, which way I ought to go from here?’ asked Alice. ‘That depends a good deal on where you want to get to,’ said the Cat. ‘I don’t much care where—’ said Alice. ‘Then it doesn’t matter which way you go,’ said the Cat.” True, Clinton stressed the need for a peace process to reach a political settlement in Afghanistan.  But that idea has been on the diplomatic agenda  for nearly two years. By the second half of last year, we were hearing that the United States had endorsed talkswith all of Afghanistan’s main insurgent groups, including the Haqqani network. By January this year, western countries said there would be no preconditions set for insurgents entering peace talks – only end-conditions that they sever ties with al Qaeda, renounce violence and agree to respect the Afghan constitution. In February, Clinton stressed the need for negotiations in a landmark speech to the Asia Society which coincided with reports the United States had begun direct talks with the Taliban. In other words, we have heard a lot about talk about talks without any explanation as to why these have achieved so little so far (some blame U.S. military strategy, others Pakistani interference, others Taliban intransigence, others poor Afghan governance).   And the danger is that as long as these talks about talks continue without  yielding results, all parties to the Afghan conflict arm themselves up in readiness for an escalating civil war. True,  Clinton admitted in public during her visit to Islamabad that the United States had held a preliminary meeting with representatives of the Haqqani network. But we already knew that.    According to The Washington Post, U.S. officials met Ibrahim Haqqani, the brother of the group’s patriarch, Jalaluddin Haqqani, in a Gulf kingdom in August. The meeting was arranged by the head of Pakistan’s Inter-Services Intelligence (ISI) agency, Lieutenant General Ahmed Shuja Pasha, who also attended, it reported. But that meeting does not seem to have gone well. It was followed by an attack on the U.S. embassy in Kabul which the United States blamed on the Haqqani network and which prompted outgoing chairman of the U.S. Joint Chiefs of Staff Admiral Mike Mullen to describe the group as a “veritable arm” of the ISI. Clinton has made clear the U.S. strategy will continue. ” We’re going to be fighting, we’re going to be talking and we’re going to be building,” she told reporters in Afghanistan.  And even if that carries a ring of ”if at first you don’t succeed, try, try and try again”, that is no reason to dismiss it out of hand. However much the United States and its allies are looking for a way out of the Afghan war, pressure is also mounting on Pakistan. Washington is stepping up efforts to bring supplies to Afghanistan through Central Asia – Clinton flew from Pakistan to Uzbekistan and Tajikistan – thereby reducing U.S. dependence on Islamabad/Rawalpindi even as Pakistan’s own deteriorating economic health is making it harder for it to risk losing international and U.S. financial support. And more importantly India this month signed a strategic partnership agreement with Afghanistan – one unlikely to have been reached without U.S. approval — which gives India the capability, if not the intention, to put Pakistan under pressure on both its western and eastern borders. Yet even as the United States doubles down, do also consider two quite different approaches, both of which have the merit of greater clarity but which are also  diametrically opposed. One of them I heard presented this month by Amrullah Saleh, the Tajik former head of the Afghan National Directorate of Security (NDS) and a fierce critic of talks with the Taliban. At a conference organised by the Asia-Pacific Foundation in London,  he argued there was no reason to believe Pakistan would be any more inclined to cooperate with the United States now than it was when Washington sent in more troops to Afghanistan. “With that escalation, Pakistan did not cooperate. Why would Pakistan cooperate with de-escalation?” he said. Rather than rely on Pakistan, he argued that the Afghan government must implement reforms to restore the trust of the Afghan people so they would at least have a state by 2014, when U.S.-led troops are meant to hand over responsibility for security to Afghan forces. And Kabul should change its policy of talks with the Taliban which had “blurred the narrative” for Afghans about who they were fighting, looking instead at reintegrating all but the 200 or so in the inner circle of the insurgency’s leadership.. But a scenario which led to a ceasefire and a political deal which left Pakistan and what he called its proxies with control over eastern and southern Afghanistan would offer only “a temporary, deceptive, stability”.  The Taliban would remain militant in order to put pressure on Kabul and extort further concessions from the west. Such a deal might provide cover for a withdrawal of western troops, but would also lead to ”massive civil strife”. The opposite approach is the one advocated by Pakistan, which  – in somewhat unfortunately chosen words - is to “give peace a chance”.  Articulated in detail in a report produced jointly by the Jinnah Institute and the United States Institute of Peace, it aims for a negotiated settlement giving Afghan Pashtun a bigger say in the political process and possibly including the Afghan Taliban and the Haqqani network. According to this version, the U.S. position of fight, talk and build cannot work because the insurgents will not trust the Americans to negotiate sincerely as long as they reserve the right to use their very considerable force.  Only a ceasefire on all sides would pave the way for meaningful talks on a political settlement. The report, criticised to some extent within Pakistan, also notes what is perhaps one of the trickiest issues in the whole approach to Taliban talks: this is not just about Afghanistan. Whatever Pakistan really wants to happen in Afghanistan, and whatever it support it does or does not give to the Afghan Taliban and the Haqqani network, it is also dependent on them to keep control of the Pakistani Taliban (TTP). According to this excerpt, those who contributed to the Jinnah Institute report questioned “the mis-perception that the Pakistani security establishment is unaware of the growing linkages between the Afghan Taliban and Pakistani militant groups.” “ However, they argue that while the current links remain limited, it is precisely the fear of these growing into full blown operational cooperation and coordination that prevents the Pakistani state from targeting Afghan insurgent groups on its soil. Moreover, the security establishment is able to take advantage of the present linkages between these groups from time to time by persuading the Afghan Taliban to pressure the TTP and other North Waziristan-based militants to curtail their activities.” Stretch that argument out further and you could make a case that Pakistan needs to get a reasonable deal for the Afghan Taliban and the Haqqanis in Afghanistan if it wants them, in return, to bring the Pakistani Taliban to heel. So to get back to Clinton and the Afghan settlement. We have three possible approaches, with various permutations.  The one currently favoured by the United States is to keep fighting, to keep the door open for talks, and to keep piling pressure on Pakistan in the hope that it yields results. The second – as expressed by Amrullah Saleh – is to take the idea of talks with insurgent leaders off the table altogether, end the confusion and build up governance within Afghanistan in the years that are left before 2014. The third is to seek a ceasefire, so that in the absence of violence, talks might take place in a more conducive atmosphere. Any one of those approaches has its merits.  But as long as all these conflicting ideas remain out there, we will see a lot of different groups lining up to argue with the Cheshire Cat.

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U.S. government eyes risk-sharing in housing bonds

Fannie Mae and Freddie Mac buy mortgages from lenders to free up cash for banks to make more loans. The two companies then repackage the loans for sale to investors as securities and charge fees to guarantee the debt.Under the private-sector risk-sharing idea, they would begin to issue some bonds without a federal guarantee.Investors in those securities would receive a higher return to compensate them for the greater risk of losses, according to the people familiar with the matter. The Wall Street Journal first reported on the possibility on Friday.The idea is just in the concept stage. The administration could consider a variety of ways to get investors to take on more credit risk, one source said.The administration and housing regulators are eyeing the possibility of using derivatives or relying on greater mortgage insurance coverage for the loans underlying the bonds to spur private-sector interest, according to the sources.Any final plan on investor risk sharing would require the approval of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac.The Obama administration would like to begin testing ideas to bring in greater private-sector involvement as early as next year, the sources said.The approach under consideration would reduce the long-term risk exposure of Fannie and Freddie. Together with the Federal Housing Administration, the companies now fund roughly 90 percent of all new U.S. mortgages.FHFA's acting director, Edward DeMarco, said in a speech last month that his agency is considering various alternatives to attract private investors to the market through different types of risk-sharing structures.

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REFILE-Swiss-Italy gas pipeline remains shut

* Libyan Greenstream pipeline sending gas in test phase* Restart of gas to Italy vital ahead of cold winterLONDON, Oct 14 (Reuters) - Gas flows through the southern leg of Transitgas pipeline, which feeds north European gas through Switzerland to Italy, will remain interrupted until at least Tuesday, the operator said on Friday, four days after the section shut following heavy rain."Weather permitting, the inspection activities should finish by 18 October 2011, and the possible date for a restarting of the gas transport on pipeline section TRG23 will be then communicated," operator Transitgas said in a note.The section shut down on Monday after heavy rainfall laid bare parts of the pipeline, which runs through the Alps, and the operator has since then been inspecting the link for damage.Last year, the 300 kilometre pipeline shut for five months after thawing permafrost unleashed rocks, which damaged parts of it.Italian gas imports have already been restricted since February, when the flow of gas from Libya via the subsea Greenstream pipeline was interrupted by civil war.Italian oil major Eni said on Thursday it had launched tests to restart gas flows through Greenstream, starting with around 3 million cubic metres of gas per day.The return of gas imports from Libya and through Switzerland will be important for Italy ahead of the winter. which is expected to bring chilling weather and boost energy demand.